If you’re trying to spot the next big bubble that will roil markets, economist Robert Shiller has a dark horse candidate: Farmland. Sure, farm bubbles are pretty rare—there was only one in the 20th century—but prices for farmland have been booming in the US and UK, Shiller points out in a piece for Project Syndicate. More importantly, “farmland, at least in certain places, seems to have the most contagious ‘new era’ story right now.”
Farmland was up 74% in real terms in the 10 years leading up to 2008, and hasn’t had nearly the crash that housing has had since. That’s mostly because the supply of houses has swelled enormously, while the supply of farmland hasn’t moved an inch. Plus, food prices are on the rise, and the global warming fears raise the specter of shortages to come—kind of like the food-price scare of the 1970s, which just happened to coincide with the last farmland bubble.